AN EXPLORATION OF ETHICAL ISSUES IN U.S. FAST FOOD INDUSTRY Dr. C.Venkata Ramana 1, Dr. Balaji D 2 1, 2 Assistant Professor, SIBM-H, Hyderabad (India) ABSTRACT The fast food segment of the restaurant industry has grown very large in many parts of the world, especially in USA and UK. Although fast food restaurants offer many advantages to customers in terms of service and availability, the industry is creating many problems to the society. The present study explores the business practices of the fast food industry with a focus on human resources issues. Some of the important issues explored in the study include ‘occupational safety’, ‘public health’, ‘service at fast food restaurants’, and ‘perception about the fast food industry’. The article also discusses some ethical issues associated with the fast food industry. The author concludes that the problems associated with the fast food industry can be solved if the firms make appropriate changes in their business practices. Also by virtue of the high profit margins enjoyed by firms in the fast food fast industry, fast food restaurants can deliver products and services of superior quality to consumers at a reasonable price. The author connotes some recommendations aimed at eliminating the problems plaguing the fast food industry. Keywords: Fast Food, Ethics, Violations, Work Place, Restaurants. I. INTRODUCTION Over the past three decades fast food has evolved as a major segment of the restaurant business. Fast food segment has grown so large that fast food by itself has developed into a separate industry. The changing life style of people characterised by a hectic schedule has contributed to a large extent to the growth of fast food industry. Speed of service, convenience and round the clock availability of food has made fast food an attractive proposition for customers especially in western countries. A fast-food restaurant is characterized by at least three things viz. „food that is supplied quickly after ordering‟, „minimal service‟, „take-away and /or take-out service‟. Although various lobbies and customer advocacy groups are fighting against some of the unethical practices of the fast food companies, the industry is witnessing rapid growth in different parts of the world other than USA. Animal rights activists, vegetarian groups and labour welfare groups are some of the harsh critics of the fast food companies. The heavy mass media advertising directed at children and families has enabled the fast food companies to boost their sales and even grow very rapidly. In response to the harsh criticism from various consumer welfare groups, the industry has been trying to move the public away from that term over the past five years, shifting to the quick service restaurant (QSR). However, consumers still refer to the restaurants as fast food restaurants despite the industry‟s efforts to change them. Fast food restaurants need relatively small capital requirements and hence thrive well in areas with non-existent or poorly enforced health codes. While some of the top ten companies in fast food industry like McDonald, Burger King and Wendy‟s have been focusing on 201 | P a g e hamburgers; other companies have focused on pizzas, chicken and salads. There has been a frantic growth of fast food restaurants in mid-1990s and currently the situation suggests that saturation is imminent. There is a misconception that fast food restaurants are a mark of modern technology culture. Fast food restaurants are very old with its style varying from culture to culture. The „bread-and olive stands‟ of ancient Roman cities, „noodle shops‟ of ancient East Asian cultures, „flat bread and falafel‟ represent the origin of the fast food industry. The modern fast food industry has been originated and evolved in USA. The history of modern fast food restaurants is connected with the history of hamburger, because the core product offered by the modern fast food restaurants was hamburger. White Castle was the first fast food company in USA, which started its operations in 1921. The big success of White Castle spawned numerous competitors. Two companies namely Burger King and McDonald‟s have contributed the most to the origin and evolution of the fast food industry. Burger King was founded in 1954 by James McLamore and David Edgerton. McDonald‟s was found in 1955 by Ray Kroc. Although the origin of Burger King and McDonald go back to almost the same year, McDonald attracted greater media attention. Ray Kroc‟s business acumen and his age contributed to the media focus that McDonald‟s gained during its early years of operation. The franchise concept adopted by McDonald‟s not only contributed to the growth and market share of the company but also to the immense publicity, which the company got since its inception. Prior to forming McDonald‟s, Ray Kroc was the world‟s exclusive agent for the Prince Castle Multi-Mixer. In 1954, Ray Kroc received an order for eight of the Multi-Mixers from a small hamburger stand in San Bernardino, California. Ray Kroc wondered about the restaurant that needed to make 48 milkshakes at a time. So he went out and saw for himself the operation of the small hamburger stand that ordered eight Multi-Mixers. Ray Kroc was impressed with the speed of the service and cleanliness. By 1960 Ray Kroc had sold some 200 franchises and bought out the McDonald‟s brothers. Even after getting control of the company, Ray Kroc did not change the name and continued the operations of the company under the name “McDonald‟s”. Burger King, which was originally called Insta Burger King was opened in 1954 in Miami, USA by James McLamore and David Edgerton. James McLamore and David Edgerton were alumni of Cornell University School of Hotel Administration. Just as Ray Kroc spotted a great opportunity after visiting the hamburger stand of McDonald brothers, James McLamore too sensed a great business opportunity after visiting the hamburger stand of McDonald brothers and decided to start his own restaurant. Some of the core products at Burger King are burgers, chicken tenders and fries. For most of its history, Burger king has been a division of a business conglomerate. Throughout its history, for a large period of time, Burger King has not been a free- standing company. The frequent replacement of CEOs at Burger King has given hardly enough time for the top management to develop a coherent growth strategy, let alone implement one. Since its inception in 1954 Burger King was acquired twice and merged once before it became a stand-alone corporation. Wendy‟s was founded in 1969 by Dave Thomas who was a former general manager at Kentucky Fry Chicken (KFC). The first Wendy‟s Old Fashioned Hamburger restaurant, named after Dave Thomas‟s youngest daughter Melinda Lou (whose nickname was “Wendy”), was opened at Columbus, USA. The origin of Wendy‟s was different from McDonald‟s and Burger King in at least two aspects, which are as follows: Dave Thomas, the founder of Wendy‟s worked in the restaurant industry since the age of 12 and was involved with the promotion of two restaurants („a four-restaurant KFC franchise‟ and „Arthur Treacher‟s Fish and Chips‟) 202 | P a g e A serious disagreement with the policies of his employer (i.e. Kentucky Fried Chicken) and his childhood desire to start a restaurant had contributed to the creation of Wendy‟s. A list of major fast food companies in USA is presented in Exhibit 1 & the popular dishes mentioned in Exhibit 2. EXHIBIT 1 EXHIBIT 2 MAJOR FAST FOOD COMPANIES IN USA LIST OF POPULAR FAST FOOD ITEMS 1 McDonald‟s 1 Hamburgers 2 Burger King 2 French Fries & Mashed Potato 3 Wendy‟s 3 Fried Chicken 4 Kentucky Fry Chicken 4 Sandwiches & Salads 5 Dairy Queen 5 Pitas 6 Jack in the Box 6 Nuggets 7 Arby‟s 7 Taco 8 Hardee‟s 8 Pizzas 9 Taco Bell 9 Ice Cream 10 Subway 10 Chilli & Chips There are three basic business models in the fast food industry viz. Low Cost, Differentiation, Focus. See Table 1 for a comparison of three fast food companies in USA. Table 1: Comparison of Mcdonald’s, Burger King And Wendy’s MCDONALD’S BURGER KING WENDY’S Focus is on Standardization Focus is on standardization Focus is on Customization Extensive network of franchisees Relatively less number of Relatively less number of franchisees franchisees Speed of service is high. Speed of service is high Speed of service is low Breakfast items are a significant Breakfast items are a significant Breakfast items are not a source of revenue source of revenue significant source of revenue A strong brand name, Specialized menu and strong Specialized menu and quality are coordination of people and brand name are the major the main Strengths resources are the major strengths strengths II. LITERATURE REVIEW There are a very few research works on the fast food industry and most of the studies focus on the labour issues, especially about wages. One of the important and probably most comprehensive research studies on the fast 203 | P a g e food industry was done by Eric Schlosser. Schlosser (2001)1 describes the impact of fast food on American Society, which includes the following: Hastened the malling of American Landscape Widened the chasm between rich and poor Fueled an epidemic of obesity Propelled the juggernaut of American cultural imperialism abroad Ali Kera et al. (1995)2 in his study titled “Marketing strategies for fast food restraints: a customer‟s view, explains the marketing strategies in the fast food industry. The study estimates the future growth of the fast food segment in USA.